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How much is the gross profit recognized by Demolish

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Reference no: EM132803232

Question - Demolish Co. uses the "cost recovery method" (traditional accounting based on old US GAAP). The records of Demolish Co. show the following information:

20x1 20x2

Sales 10,000 15,000

Cost of sales 8,000 9,000

Cash collections: - from 20x1 sales 7,000 3,000

- from 20x2 sales 12,000

How much is the gross profit recognized by Demolish in 20x2?

a. 3,000

b. 0

c.5,000

d. 2,000

Reference no: EM132803232

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